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Executive Summary

Walgreens' aggressive store expansion program during fiscal 1986 resulted in a record 193 drugstore openings for the year, the chain reported. These included 102 new stores and 91 acquired units. At year end, the chain operated 1,273 drugstores. "In addition to opening more new stores than at any time in Walgreens history -- nearly half of Walgreens stores are now less than six years old -- the company did major remodelings (in excess of $100,000 each) on 89 existing stores," President Fred Canning stated. "We plan to remodel 100 stores in fiscal 1987." For the fourth quarter ended August 31, Walgreens reported a 19% increase in corporate volume to $926.6 mil. from $778.8 mil. in the fourth quarter of fiscal 1985. Net earnings, however, were flat at $26 mil. The company explained that the previous year's results benefitted from a $2 mil. LIFO credit. Walgreens' net earnings crossed the $100 mil. mark for the first time in fiscal 1986, rising 9.6% to $103 mil. Sales during the twelve months were up 16% to $3.66 bil. "Our results were achieved despite unusual expenses in the fourth quarter related to the acquisition of 66 Medi Mart drugstores in the Northeast," Chairman Charles Walgreen III stated. Noting that the chain incurred interest expenses and one-time start-up costs related to the June acquisition, Walgreen commented: "The initial results from these stores are good, and we're enthusiastic about serving the densely-populated and underchained Northeast markets." Pharmacy sales remained strong during the year, the chain reported, increasing nearly 29%. "Today, Walgreen pharmacists fill nearly 3% of the nation's prescriptions," Canning remarked. "We expect pharmacy sales to reach $1 bil. in 1987." Based on the chains reported 1985 sales breakdown, pharmacy volume was approximately $800 mil. in fiscal 1986. Announcing its year-end results, Bergen Brunswig reported net earnings declines for both the fourth quarter and year ended Aug. 31. Profits dropped 3% to $5.8 mil. and 11.2% to $20.7 mil. in the three months and 12 months, respectively, despite sales increases of 17% to $794 mil. and 26% to $3.1 bil. The wholesaler's fiscal 1986 results included a fourth quarter $9.4 mil. after-tax gain in connection with the spinoff of its Commtron subsidiary in July. "We expect the first quarter to be profitable and further earnings improvement in 1987 as operations from our acquisition and expansion program are consolidated and costs and expenses are reduced," Bergen Chairman Emil Martini, Jr. said. Chart omitted.

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